Microsoft buys Nuance, AI company that made Swype keyboard app

Microsoft has confirmed it’s acquiring Nuance Communications, Inc., a cloud and AI software company known among consumers for creating the Swype keyboard app. The deal is valued at $19.7 billion, making it the second-largest behind Microsoft’s purchase of LinkedIn for $26 billion in 2016.

In a blog post, Microsoft said the acquisition is primarily for Nuance’s healthcare and enterprise AI experience. Microsoft has made inroads into the healthcare industry with its Microsoft Cloud for Healthcare platform, which launched in 2020. The Redmond-based company said today’s announcement “represents the latest step in Microsoft’s industry-specific cloud strategy.”

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, CEO, Microsoft. “AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”

Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One — all of which include speech recognition SaaS offerings build on Microsoft Azure. The company’s solutions are said to be used by more than 55 percent of physicians and in 77 percent of U.S. hospitals. Nuance’s Healthcare Cloud revenue experience 37 percent year-over-year growth in the company’s fiscal year 2020 (ending September 2020).

Microsoft and Nuance previously entered into a partnership back in 2019, which saw Microsoft use Nuance’s software to digitize health records. Microsoft said the existing partnership will expand to better empower existing healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services.

In addition to healthcare applications, Nuance provides AI expertise and customer engagement solutions across Interactive Voice Response (IVR), virtual assistants, and digital and biometric solutions. Most consumers know Nuance for creating its Swype keyboard, which offered Dragon dictation. The keyboard was ultimately discontinued, but its features have been copied in many other alternatives.

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO, Nuance. “To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care.”

The acquisition will see Microsoft pay $56 per share, a 23 percent premium over Nuance’s closing price on Friday, April 9. The deal has been unanimously approved by the Boards of Directors of both Nuance and Microsoft and is expected to close this calendar year.

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